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The US aircraft manufacturer Boeing will seize all the civil activities of the Brazilian aircraft manufacturer Embraer for $ 3.8 billion, an operation that will allow it to compete with its European rival Airbus in the segment of regional aircraft.
Specifically, Boeing and Embraer announced Thursday the signing of a memorandum of understanding to create a joint venture, 80% controlled by the US and 20% by the Brazilian, heading "all the activities of the 'Embraer in the fields of commercial aviation', which are valued at 4.75 billion dollars.
This agreement, qualified as a "partnership", will allow Boeing to complete its offer by integrating regional airliners Embraer's 70 to 150 seats (ERJ and E2).
This new company will also integrate the services of the Brazilian aircraft manufacturer and the development, production, marketing and Boeing after-sales services, said two aircraft manufacturers in a joint statement.
This announcement comes a few days after the Airbus-Canadian Bombardier partnership took effect, allowing the European to take control of the Cseries program, competing with that of Embraer.
The agreement between the American and Brazilian aircraft manufacturers still has to obtain the green light from the Brazilian state, which has a veto right on strategic decisions for the future of its industrial flagship.
"Subject to obtaining timely approvals, the transaction is expected to be completed by the end of 2019, 12 to 18 months after the signing of the final agreements," said the two parties. aircraft manufacturers
Once finalized, this joint venture "dedicated to commercial aviation" will be led by a team "based in Brazil, headed by a president and a general manager," they continued. The new entity will also report directly to Dennis Muilenburg, Boeing's CEO.
"By forming this strategic partnership, we will have an ideal position to bring significant value to the customers, employees and shareholders of both companies. as well as in Brazil and the United States, "commented Mr. Muilenburg, quoted in the statement.
Third largest aircraft manufacturer in the world with nearly $ 6 billion in turnover and 16,000 employees, Embraer – privatized in 1994 – is one of the industrial jewels of Brazil with not only a range of civil and military planes, but also business jets.
In Brazil, during the preliminary discussions, voices had been raised that such agreement does not include Embraer's military activities.
– "Righteous" for Brazil –
In this area, Boeing and Embraer have announced that they have agreed to create "another joint venture to promote and develop new markets and applications for products. and defense services, especially the KC-390 multi-mission aircraft, developed by Embraer for military transport.
For Embraer, the operation will benefit from Boeing's commercial force.
"The agreement with Boeing will give birth to the most important strategic partnership of the aviation industry and strengthen the leadership of both companies in the global market," said Paulo Cesar de Souza e Silva, CEO of Embraer.
"The merger of our activities with Boeing should create a virtuous cycle for the Brazilian aerospace industry by increasing its sales potential and production," he said.
The two companies also specify that this transaction should improve Boeing's earnings per share as of 2020 and generate pre-tax cost savings of approximately $ 150 million by the third year.
Embraer's side, the prospect of an agreement with the US group had already helped to jump more than 30% its title to the Sao Paulo Stock Exchange since January. But equities fell by more than 7 percent on Thursday after the release.
"This strategic partnership is a natural evolution of Boeing's long-standing relationship with Embraer in a series of aviation initiatives spanning three decades, "said Greg Smith, Boeing's CFO and Director of Performance and Strategy.
He believes that this finally fits "fully with Boeing's corporate strategy of seeking strategic investment opportunities that demonstrate real value and accelerate our plans for organic growth."
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